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[Muz]

Ah, I had a little idea to start a games publishing company. Might actually seriously go with this, so, I'd like the opinions of you guys in case I overlooked something


The problem
Computer games have sort of relied on targeting a small market and are charging ridiculous prices for a rare product. I mean c'mon, $20 for a cheap game? But since the Internet, they're losing 90% of sales to piracy. They could rely on an honor system, or put some draconian DRM on it, and lose customers both ways.

Proposed solution
I'd say that more people are willing to buy games if they were just cheaper. These people work hard to make games, but I think that everyone would be happier if instead of 20 people paying $20 and 80 people pirating, it's better for 50 people to pay $10. The CD and box costs only a few cents, and shipping will be paid by the purchaser, so not much loss there

I'm proposing a business model similar to low-cost carriers. The price goes up and down according to demand. Pre-order a game and you get it cheaper, around $10. If a lot of people are enjoying it, the price goes up a bit, maybe around $30 or $40 for a well-reviewed AAA game. Stores would probably have it at the same price, but perhaps under the condition that they sell it for more when the value goes up. Also, a lot of the pricing takes into account how likely people are to pirate the game, based on things like DRM, file size, availability to download.

Indie games
Branching out a little, a lot of the income would come from publishing indie games. Unlike most of the other companies, I'm not touching the design. It doesn't matter if they don't appear to appeal to the "mass market", touching the game design harms the designer's vision and it's not very popular either. It would pretty much act as the distributor and marketing, not touching the development process at all.

High budget games
Here's perhaps where I hope the money comes from. The company would train some of the better and willing indie game developers to learn better game development skills. The high budget games' development would be adjusted to suit the expected market, though.

[Mephansteras]

Well, you'd pretty much have to start off with indie games. Until you get a proven track record, I doubt any of the major firms would bother doing business with you. Also, until you get fairly successful you're going to have a very, very hard time getting any product into actual retail stores. Which means you're going to start off being internet-only for a while.

Not saying its a bad idea, or that it can't work. However, you're going to have an up-hill battle getting this started.

[Buddybud]

One thing to consider is the question "are the losses real". Let me put this way, just because someone will download a pirated version of of a game does not mean they would have bought it legitimately. In other words if  100,000 units are pirated does not mean they lost 100,000 units in sales, though companies like to think so.  The classic example of this is music. I admittedly download music (which is still not illegal where i live, distribution is though) but the fact is i never would have purchased 90% of what i downloaded....simply because it's not so good, or i would have bought it second hand which still gives the company nothing. Or the simple fact that i could never afford to buy a thousand 30 dollar cd's etc. So restricting my downloading of music would not increase my purchases. The thing needed is quality. The best example i can think of is "the greatful dead" which allowed the taping and trading of their shows for decades. At the same time they where one of the top grossing acts of that period, regardless of the bootlegging. Again the problem is the companies want people to buy crap that is unfinished, bug ridden or simply just bad. Infact i would say 99% of the software titles out their are just horrible and never should have made it to market. But what to do.....oh right....download it and try it first to avoid being suckered in....haha.    aye matey!


ya cheaper is the way to go.....1000 units at 4$ is more profit that 100 units at 20$.

[Mephansteras]

Another thought: Funding. One of the major roles of a Publisher is to provide much of the funding for a game so that it actually gets made. That's precisely why the major publishers meddle so much in a game's production. It's their money, so they have a lot to lose if the game doesn't make money.

Are you going to follow that model? If so, where are you going to get the money to do so?

You could go for VC funding, of course. You could also try to form a partnership with a few indie developers, and try to make enough money off of the games they make to get yourself to the point where you can actually start funding game development.

[Chutney]

ya cheaper is the way to go.....1000 units at 4$ is more profit that 100 units at 20$.

Unless it costs 10$ to produce 1 unit.
You also have to figure how much time and money was spent making the game. If it takes 10,000,000$ and 5 years you're going to need to make that money back, preferably quickly, so you're going to need a higher price.  Selling that game at 10$ a unit means you have to sell 1,000,000 units, whereas selling it for 20$ (or more likely 40$+) means it only takes 500,000 units (or more likely 250,000- units). This is why video games are getting more expensive: because it costs more money to make them, and in order to make a profit you need to make that money back and make a new video game.

[Jude]

As long as people keep buying $50 games, this will never happen. And since people can be relied upon to buy games the day they come out, companies can charge whatever the heck they want as a debut price.

[eerr]

As long as people keep buying $50 games, this will never happen. And since people can be relied upon to buy games the day they come out, companies can charge whatever the heck they want as a debut price.

games would be about 10-25$ dollars cheaper, but the surcharge is licensing fee charged by sony, nintendo, and microsoft.
this profit is used to fun future development of new consoles.
less money, crappyier new consoles.

and nobody wants that.

[Muz]

Wrote a long reply and Firefox crashed. Twice 

Heh, about the money, don't worry about it. Let's assume that I could get at least $1 Mil from investors. I kinda tossed the idea to some businessmen outside the games industry and they were far more excited about it than me. Everyone wants to be a revolutionist, lol.

It certainly doesn't cost much to produce one unit.. more like $2-$0.50, depending on what stuff you bundle with it. And that's not even mass produced. It's producing all the units that cost a lot, but if you could recoup more money with lower prices, I'd say that's the way to go.

The consoles licensing thing is a good point, though. I suppose console games could go for higher prices, because there's a much lower piracy rate. It's the PC games that have trouble with pirates.

[eerr]

It certainly doesn't cost much to produce one unit.. more like $2-$0.50, depending on what stuff you bundle with it. And that's not even mass produced. It's producing all the units that cost a lot, but if you could recoup more money with lower prices, I'd say that's the way to go.

Um, printing cd's and cases was never a huge cost even in the age of floppy disks.

you can go out, buy a 10$ stack of 10  disks, and then place your game on each and every one.

in the process, you probably have so little you skip the retail markup of 10$, the console developer markup of 15$ and the development cost of paying slave labor other than yourself.

[Grendus]

The main problem, I think, is you're presuming that by halving the cost of games you will double the consumption. I don't know if that's true or not, and I do know of some companies that survive on that mantra though they're not huge, but generally I think that most game companies strive to get prices at that butter-point where they'll get the most profit.

[eerr]

The main problem, I think, is you're presuming that by halving the cost of games you will double the consumption. I don't know if that's true or not, and I do know of some companies that survive on that mantra though they're not huge, but generally I think that most game companies strive to get prices at that butter-point where they'll get the most profit.

My brother eric is tinkering in random bits of software, but he's too slow at it. A mathemetician's approach is not as profitable(if its hard, come back later and try again).

he's considered this but I have no doubt he still has the least idea what his product will sell for.

Hell, I don't know if he's even halfway done with any of it.

[Muz]

You guys would be surprised at what the market analysis suggests. At a certain level, downloads are translated directly into sales. Charging lower for a high-quality product is a lot of loss, obviously, so there is that butter-point. Obviously, I'm not going to set it at half price, but I can't get into the details, so you'll just have to assume that I've found a better, more profitable balance

The problem with the present pricing system is that companies go with what's worked before. Which is really stifling. Everyone aims to make the next Sims or Warcraft, but I'm a bit skeptical with how much longer the model of "ripping off your customers" (i.e. charging $50 per expansion pack) will last. It's a bit of a cutthroat business, the industry rips off their employees, resorts to publicity stunts to get sales, charges ridiculous prices, stifles growth for short-term gain. There's no long-term planning. I'll bet you that even in this century, you'll never find a commercial company creating something like Dwarf Fortress. Game companies have a notoriously short lifespan and it's only so long before it collapses on itself (again).

[Duke 2.0]

I kinda tossed the idea to some businessmen outside the games industry and they were far more excited about it than me. Everyone wants to be a revolutionist, lol.

Note getting businessmen excited is as easy as kicking a kitten who thinks you are its mother, and generally a similar result will come of it.

 Note I don't mean to bring down your idea, but considering your plans and the current state of the games industry this seems more like a teenage dream than an actual revolution. While I would hope this revolution would come, there are other revolutions I look forward to even more.

[sneakey pete]

Remeber, Net Profit=revenue-expenses.

Look, if selling really cheap games really pulled in a greater Net Profit, i think the companies of the likes of EA etc. would have lowered prices already. Some random folks on an internet forum aren't likely to think of somethign that they haven't already thought up, looked at, and done a extensive survey and calculations to determine how it would effect their profits.


Still, to the OP, if your really convinced you want to start publishing: calculate the *full* amount of expensives per copy, do some surveying to find out *exactly* how many more people more would buy games that are at a lower price, then try and figure out what sort of money you'd actually be making from it all. at least then you might get someone who wants you to sell their game.

[eerr]

You guys would be surprised at what the market analysis suggests. At a certain level, downloads are translated directly into sales. Charging lower for a high-quality product is a lot of loss, obviously, so there is that butter-point. Obviously, I'm not going to set it at half price, but I can't get into the details, so you'll just have to assume that I've found a better, more profitable balance

The problem with the present pricing system is that companies go with what's worked before. Which is really stifling. Everyone aims to make the next Sims or Warcraft, but I'm a bit skeptical with how much longer the model of "ripping off your customers" (i.e. charging $50 per expansion pack) will last. It's a bit of a cutthroat business, the industry rips off their employees, resorts to publicity stunts to get sales, charges ridiculous prices, stifles growth for short-term gain. There's no long-term planning. I'll bet you that even in this century, you'll never find a commercial company creating something like Dwarf Fortress. Game companies have a notoriously short lifespan and it's only so long before it collapses on itself (again).

is your model more like... steam? or dwarf fortress?